Federal government employees spent millions of dollars of taxpayer money using their government purchase cards to pay for questionable items such as Internet dating services, Brooks Brothers suits, expensive steak dinners, personalized iPods, computers, and more, and much of the expensive electronic equipment has been lost or stolen, according to Congressional investigators.
It’s fairly easy to misuse government purchase cards, which are like normal Visa and MasterCard credit cards, according to the Government Accountability Office. Investigators examined purchase card transactions made between July 2005 and June 2006 and estimated that for 41 percent of them, government cardholders did not follow proper procedures to prevent waste, fraud and abuse.
In one egregious case, a Forest Service employee wrote convenience checks to her boyfriend on her purchase card account, embezzling $642,000 over six years, according to a GAO report published Wednesday. The money “was used for personal expenditures, such as gambling, car loan and mortgage payments, and other retail purchases,” according to the report.
The cardholder, who was not named in the report, pleaded guilty in 2007 to embezzlement and tax fraud and was sentenced to 21 months in prison followed by 36 months supervised release and to pay back the $642,000.
And in many cases, things that weren’t tied down simply disappeared. Investigators noted that government agencies were unable to locate 458 of 1,058 expensive and “easily pilferable” items, such as iPods, digital cameras, laptop computers, and sometimes even larger items, accounting for $1.8 million in missing merchandise from the $2.7 million sample. The largest was described as “256 items making up 16 server configurations, each of which cost nearly $100,000.”
The report gave several more examples of improper, fraudulent or abusive transactions:
- A postmaster at USPS used his government purchase card to fraudulently subscribe to two Internet dating services over 15 consecutive months (April 2004 through October 2006). The monthly charges for these dating services were the only charges that appeared on the cardholder’s monthly statements during this period; yet each of these charges was authorized and paid for by USPS. The cardholder paid restitution of over $1,100 but faced no disciplinary action for this fraud.
- One USDA cardholder used year-end funds to acquire a Toyota Sienna and a Toyota Land Cruiser totaling nearly $80,000. Although the purchases were made at the request of two Foreign Agricultural Service offices, the cardholder violated agency policy by failing to acquire a GSA waiver. The cardholder also used four convenience checks, purchasing the Toyota Sienna with one check and splitting the payment for the Land Cruiser into three separate checks because its purchase price exceeded the convenience checks maximum purchase limit. Although documentation from USDA showed that the vehicles were shipped overseas to the units that requested them, we did not perform additional work to determine whether these vehicles represented a valid government need.
- One cardholder at DHS improperly bypassed competitive requirements of the FAR to purchase three personal computers totaling over $8,000. In this instance, the person who requested the computers provided the purchase cardholder with the specifications and a request that the items be purchased from the requesting individual’s preferred vendor. The cardholder did not apply due diligence by obtaining competitive quotes from additional vendors. Instead, the cardholder asked the requesting official to provide two “higher priced” quotes from additional vendors. In doing so, the cardholder circumvented the rules and obtained the items without competitive sourcing as required by the FAR [Federal Acquisition Regulation].
- USPS paid over $13,000 for 81 conference attendees to dine at an upscale steak restaurant in Orlando, Florida, in 2006. The dinner, which cost over $160 per person, included steaks, crab, appetizers, and over $3,000 in alcoholic beverages purchased over a 5-hour period. We define this transaction as abusive.
- At the National Aeronautics and Space Administration (NASA), a cardholder used the government purchase card to acquire two 60GB iPods. Although NASA officials maintained that the iPods were essential for official data storage, we found that the cardholder personalized the iPods with the requester’s and agency’s names and used the iPods to store songs and music videos. Although the iPods had some business files on them, we concluded that the purchase was abusive because other data storage devices without video and audio capabilities were available at lower costs.
The report lists many more examples along the same lines, including a Department of the Interior employee who just brazenly walked up to an ATM and used the card to get $24,000 in cash advances, and four Department of Defense employees who spent over $77,000 on clothing and sporting goods equipment. The $860 military clothing allowance just doesn’t cover the cost of a Brooks Brothers suit.
And remember, it’s money that was stolen from you that these bureaucrats are wasting on themselves. Many of them actually seem to think that it’s okay to take your money by threat of violence and spend it on themselves. How do you feel about April 15th now?
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Bob
Apr 09, 2008
Goddammit that pisses me off, but when the free money runs out, there’s going to be a lot of people standing around with their teeth in their mouth wondering why things aren’t so easy anymore and their misery will give me a balancing amount of satisfaction.
That time gets closer every day. Too bad that so many good people will suffer too.
Terry mullins
Apr 09, 2008
I feel each and every employee who violated the use and policy of the cards should be FIRED from government service, their retirement seized to help repay the tax paying citizens, charged criminally and given the maximum sentences allowed by the courts. Also they must be court ordered to repay every cent they stole from us. NO EXECEPTIONS.
Does it suprise me??
Apr 10, 2008
Hell no somebody teach them a lesson. There are poor children running around with no shoes and these guys are ripping us off. Something needs to be done!!!!
Fraud Guy
Apr 11, 2008
Interesting.
While working in merchant credit card processing, we often ran into troubles with government purchasing cards. Basically it boils down to the fact that the cards can be restricted to purchases made at certain types of businesses. For example, a card can be set so that it will only be usable at T&E (Travel and Entertainment) establishments, such as hotels, restaurants, airlines, and taxis. If the user of such a card attempted to make a purchase at a electronics store, it would be denied, and excessive attempts could be used to close down the card.
Of course, that was during the nineties, so they may have enhanced purchasing cards since then, to allow these more liberal spending habits.
Michael Hampton
Apr 11, 2008
Fraud Guy, you said it: The cards can be restricted in certain ways, but all too often they are not. And then there are convenience checks, which bypass all that and which not that many people are even aware of.
Mo
May 07, 2008
Luckily, lifting the gas tax for the summer should pay for all of that, right?
S
Jun 09, 2008
An antitrust employee for the Department of Justice misused a government credit card and took $3000 out on cash advances. That person didn’t get fired they only got a one day suspension. Where the justice?
sharon
Jul 25, 2008
There is a big difference between misusing a government purchase card and misusing a government travel card. THe big difference is that in the travel card, where you can take a cash advance, the individual is directly liable for payment to the credit card company NOT the government. There is no liability on the part of the Federal Government for an individually billed government travel card, period. However, the card is intended to be used for official travel purposes only. The fact remains that while getting cash advances when the employee is not on official travel is a violation of regulation, it is not a criminal offense. Hence the suspension…. for first offense, second offense he may well get fired.
Puddy_tat
Jul 30, 2008
Hi All,
These people should all go to federal pound them in the backside prison do not pass go do NOT COLLECT that $200 GPCard!
Tat.
Conster
Sep 28, 2008
They should run things in the civvie sector of the fed government the same way they run things in the military. If you are caught, expect to get a foot up your ass along with a bill for whatever you spent plus interest.
mschessika
Jan 07, 2010
how about having the gov credit card in your wallet with all the rest of your credit cards thinking its just not going to happen to you and get $20 gas and not knowing it until the chain of command sits down with you and lets u know and you rush to pay it off and put it away to avoid any further penalties. do u think the cardholder should get penalized for the first offense or should?
Michael Hampton
Jan 07, 2010
For a “first offense”, especially if it’s a simple mistake, I think it would be sufficient to just pay back the mistaken expenditure. After that I wouldn’t consider it mistaken anymore.
David Webb
May 19, 2010
I work in our GPC Division and if the person uses a Government Purchase Card by mistake, I tell them to go to the merchant and do a switch payment. They take cash or another card and tell the merchant to place the transaction on it and remove the charges on the Government Purchase Card. There are many things a GPC holder has to do in order to purchase items from entering it into PCMS to the US Bank AXOL System. For the abuse above, they go to jail, pay a fine/restitution and lose their job.
Tim
Aug 28, 2010
The transit agency I work for takes this P-Card program VERY seriously. Splitting purchases, Red-Flag purchases, computer or media items without authorization have serious consequences. Even the unions won’t challenge disciplinary action or termination with regard to P-Card fraud or abuse.